Credit Cards & Christmas (or Hannukah) - Did I Spend Too Much Money?

Here is the abbreviated answer to my last blog.

Question: Will the credit card charges I made for holiday spending be discharged in bankruptcy?

Answer: If you used credit to make holiday purchases then you may want to delay your bankruptcy filing to make sure the debt is dischargeable. A creditor or the trustee may challenge the dischargeability of your debt if:

1) You had charges of greater than $550 on a single credit card for “luxury goods or services” within 90 days of filing; or

2) You took cash advances for more than $825 within 70 days of filing from all of your credit cards combined.

Luxury goods and services do not include goods or services that are reasonably necessary for support and maintenance of you or your dependents. Holiday gifts of food or diapers would not be “luxury goods.” A new flat screen TV or a new kitchen probably would be considered a luxury. Service on your car to allow you to get to work would not be a “luxury” service, but a taking your partner to a spa for the full pampered treatment would likely be considered a luxury expense.

If you spent too much on credit this holiday season, you may benefit from waiting until the applicable time period passes before filing for bankruptcy relief. However, if creditors are preparing to attach your wages or foreclose on your home you may not be able to wait. If you need bankruptcy advice, talk with your lawyer.

Happy Holidays!

Disclaimer: This article is intended for informational purposes only and no attorney-client relationship is formed or intended.